Latest News and Opinion

The geopolitical and market bogeymen of the moment – Kim Jong Un, Vladimir Putin, tariffs, cyber warfare – are riding tall in the saddle.
That’s sparked something of a “flight to safety,” which ignited a bit of an uptick in demand for Treasuries this …

If targeting political extremes generates the most profit, then that’s what these corporations will pursue.As many of you know, oftwominds.com was falsely labeled propaganda by the propaganda operation known as ProporNot back in 201…

This weekend, I’d like to take a slightly nostalgic trip down Memory Lane, into the dark, swirling menacing pool that was the dawn of the Internet. OK, that sentence didn’t end up quite where I meant it to.

When I started my newsletter business in October of 2000, I decided to have a little fun with it on this new thing called the World Wide Web, aka “the internet.” If you, like me, are of a certain age, you remember well that we started every web address with the ubiquitous www.

WSJ: “Ten Years After the Bear Stearns Bailout, Nobody Thinks It Would Happen Again.” Myriad changes to the financial structure have seemingly safeguarded the financial system from another 2008-style crisis. The big Wall Street financial institutions…

It has been 2 months since I last had a chance to respond to reader comments. This seems like a good time to pause and take the opportunity to do so again. Keep them coming!

Today, since I’m in a contrarian mood, I thought I’d focus on ever-so-kindly replying to people who don’t see eye to eye with me…

I really enjoy these exchanges. They get my creative analytical juices flowing, and force me to consider alternative viewpoints which I may not have done initially.

In fact, the more rebuttals I write, the kinder I feel! Which is why I’ve decided to report a special gold opportunity today (continuing our prickly theme with an investment that is the very definition of contrarian right now).

If indeed this inflation hysteria has passed, its peak was surely late January. Even the stock market liquidations that showed up at that time were classified under that narrative. The economy was so good, it was bad; the Fed would be forced by rapid economic acceleration to speed themselves up before that acceleration got out…

The Reluctant Labor Force Is Reluctant For A Reason (and it’s not booming growth)

In 2017, the BLS estimates that just 861k Americans were added to the official labor force, the denominator, of course, for the unemployment rate. That’s out of an increase of 1.4 million in the Civilian Non-Institutional Population, the overall prospective pool of workers. Both of those rises were about half the rate experienced in 2016.

While population growth slowed last year, it produced, apparently, an almost constant participation rate. That suggests either statistical “fitting” or the same labor market conditions nowhere near strong enough to entice the millions (as many as 16.4 million) sitting outside the official definitions.

It works out to labor force growth averaging about +72k per month last year. Going back to March 2016 (the last month of SNAP work requirement waivers being pulled), the labor force has expanded by just +64k per month. These are, as noted earlier today, grim figures way, way out of the historical norm. Given the timing for when it started, it’s not drugs and gray hair.

Liquidity moves markets!

It further undermines the unemployment rate, though that isn’t news. The official estimate has been at or below 5% for 27 straight months; it’s been 4.5% or less each of the last ten months of 2017.

By now it should be clear enough that the current 4.1% is a calculated number and nothing more. Like the old computer programming adage, GIGO remains an appropriate expectation (garbage in, garbage out). It’s a very poor basis for more than inflation expectations. Indeed, the FOMC is voting on symbolic “rate hikes” as if any day now the unemployment rate as it is stated will suddenly switch over to relevant.

But it’s not just the denominator that’s the problem with the ratio. The top of the fraction has been growing faster than the bottom, to be sure, producing its quickening downward trajectory, but that doesn’t necessarily mean it has been growing fast. It hasn’t. The result is wage growth that remains suspiciously subdued for the fourth year in a row.

Of the acceleration in average weekly earnings in 2017, all of it was due to a rebound in total hours worked rather than the anticipated end of slack and competition for workers. Employers in response to the “rising dollar” downturn not only cutback on hiring (as well as capex), they ever-so-slightly reduced the hours of the remaining workforce, too. The initial result was deceleration in weekly earnings right at the moment (early 2015) the unemployment rate broke through the FOMC models’ expectations for what should have constituted “full employment.”

It makes all the rest incredibly simple. The lack of labor force growth going on nearly a decade now means that in every likelihood there remains a deep pool of American labor from among which Americans would work if there was any (at the margins) to be hired at a decent rate. Couple that with what appears to be the rebound in hours falling short of recovery (as suggested by alternate data, such as revolving consumer credit), the result is for Economists a Phillips Curve nightmare; the unemployment rate falls on their charts but no one who matters cares enough to hear it.

What follows from there is everything captured in the dramatically flattening yield curve; the FOMC changing monetary policy references based on future growth that just isn’t indicated anywhere dead against what was clearly another lost year for labor. You get enough of those in a row, like we have witnessed, and no wonder the long end of the curve won’t budge no matter how low the unemployment rate might travel and how shrill Economists and other “experts” become in their expectations for what that’s supposed to indicate.

Economists are fooling themselves chasing a circular shadow of subjective bias – that the malaise has to end because there has to be an end to the malaise. There doesn’t, and the full range of data contained within the payroll reports for 2017 proved yet again that continues to be the case.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Cut through the Wall Street spin to get a clear view of the markets and the economy."Get the facts" delivered every day.

Check your inbox for the confirmation email which is sent instantly. If not there, check your SPAM folder and be sure to whitelist the "From: Lee Adler" email address. Your information will *never* be shared or sold to a 3rd party.

Cut through the Wall Street spin to get a clear view of the markets and the economy. "Get the facts," delivered by email.
- Lee Adler

(Optional)

Check your inbox for the confirmation email which is sent instantly. If not there, check your SPAM folder and be sure to whitelist the "From: Lee Adler" email address. Your information will *never* be shared or sold to a 3rd party.